The Klang Valley Commercial Office Market.

The KL City Centre.

As I have mentioned before, due to greater competition and the possibility of an office space oversupply, the Klang Valley commercial office markets remain rather soft so far. From what I see, the occupancy rates seems to be dropping, and rental rates are also gradually stabilizing downwards.

As per sources, the current cumulative supply of purpose built office spaces in the KL city centre area accounts at about 40+ million sq ft, with the most recent addition being Menara Bank Islam along Jalan Perak. Other new buildings completed recently includes the Hampshire Place office, with several others completing by end of this year - of which those includes Menara Carigali (as pictured above), now known as Menara Petronas 3 and Dijaya Plaza at Jalan Tun Razak. Those expecting completion early next year would be the Menara Binjai along Jalan Ampang as well as the Glomac Tower along Jalan P Ramlee. The cumulative supply of office spaces outside of KL city centre (i.e. Damansara, PJ area etc) accounts at about 15 million sq ft.

Menara Bank Islam, Jalan Perak

While there has been new buildings completed, there are also plenty of plans and proposals to upgrade and refurbish old ones. Tradewinds Corp has announced plans to demolish the Crowne Plaza Mutiara Hotel and Kompleks Antarabangsa - and for it to be redeveloped as Tradewinds Centre - a multi-billion mixed commercial development, comprising office spaces, retail, serviced apartments as well as a medical centre. Kompleks MAS is undergoing its own tender exercise for its own redevelopment, and a couple of other buildings around KL City Centre doing the same too.

I mentioned about a stable rental rate for offices at the current moment. Based on the general figures compiled, I think it is safe to say the average rental rate in the KL City Centre area now is about RM5+ per sq ft, with those outside of KL City Centre fetching about 50 cents lower. There are the super Grade A offices which gets much higher - between about RM7-RM11.50 per sq ft - Menara Maxis still garners about RM10+ per sq ft per month, while the Twin Towers are still the ones hitting the highest rates.

If you were to look at all the various indicators, I would think that the Klang Valley commercial office markets will remain very competitive - which means this will be quite challenging for the developers. However, competition makes it good for the tenants - they would have more choices to choose from as well as better rates/packages/offers. With the Government's ETP programme in full swing to attract large MNCs as well as the commencement of our mega MRT project - I would think that long term wise the market still remain very good.

Furthermore, there will be a new trend of new and modern buildings - all of which are good to improve the standards of commercial office buildings in Malaysia. I believe many developers out there are starting to 'go green' with new certifications and statuses. Recently, the Intermark obtains its MSC Cybercentre status, while its new Integra Tower (above) had obtained the Platinum LEED certification. Menara Binjai (pictured below) will be the first purpose-built office tower in the country to obtain a dual-green certification - the BCA Green Mark as well as GBI Malaysia.

As I would say... as the going gets tough, the tough gets going. =)